Deck 5: Job-Order Costing

Question 1

Manufacturing and service firms producing unique products or services require job-order accounting systems.

Answer 1

True

Question 2

The key feature of job-order costing is that the cost of one job differs from that of another job and must be kept track of separately.

Answer 2

True

Question 3

The three manufacturing cost elements are direct materials, direct labor, and overhead.

Answer 3

True

Question 4

The work-in-process account consists of all the job-order cost sheets for the completed jobs.

Question 5

A job-order cost sheet is the source document where direct labor costs are assigned to individual jobs.

Question 6

Actual overhead is used to arrive at the cost of goods manufactured.

Question 7

The raw materials account is an inventory account located on the income statement.

Question 8

If the overhead variance is immaterial, it is allocated among the ending balances of Work in Process, Finished Goods, and Cost of Goods Sold.

Question 9

The use of a departmental rate has the advantage of being simple and reduces data collection requirements.

Question 10

The use of normal costing means that actual overhead costs are assigned directly to jobs.

Question 11

If actual overhead is greater than applied overhead, the variance is called underapplied overhead.

Question 12

Production costs consist of direct materials, direct labor, and overhead.

Question 13

In an actual cost system, actual direct materials, actual direct labor and estimated overhead are used to determine unit cost.

Question 14

Departmental overheads cannot be added together to get plantwide overhead.

Question 15

There are other source documents besides the time ticket and the material requisition form used to fill out the job-order cost sheet.

Question 16

Costs reported on the financial statements must be estimated costs.

Question 17

Actual overhead is reconciled with applied overhead at the beginning of the period.

Question 18

Using a time ticket, the cost accounting department can enter the cost of direct materials onto the correct job-order cost sheet.

Question 19

The difference between actual overhead and applied overhead is called an overhead variance.

Question 20

The cost of goods sold appearing on the income statement as an expense is the normal cost of goods sold.

Question 21

The cost of completed units is always debited to Work-in-Process and credited to Finished Goods.

Question 22

Match each item with the correct statement below.
a.actual cost system
b.job-order costing system
c.normal cost system
d.process-costing system
An approach that assigns the actual costs of direct materials and direct labor to products but uses a predetermined rate to assign overhead costs

Question 23

Match each item with the correct statement below.
a.actual cost system
b.job-order costing system
c.normal cost system
d.process-costing system
A costing system in which costs are collected and assigned to units of production for each individual job

Question 24

In job-order costing, the journal entry for overhead applied at the rate of $3 per direct labor hour when 210 direct labor hours were worked is:

Question 25

Match each item with the correct statement below.
a.predetermined overhead rate
b.plantwide overhead rate
c.departmental overhead rate
d.overhead variance
e.overapplied overhead
f.underapplied overhead
g.applied overhead
h.normal cost of goods sold
The amount by which actual overhead exceeds applied overhead

Question 26

The journal entry for $17,000 materials purchased on account is:

Question 27

In job-order costing, the journal entry for $1,700 of unpaid direct labor is:

Question 28

In job-order costing, the journal entry for a completed job costing $7,000 but not sold is:

Question 29

Match each item with the correct statement below.
a.predetermined overhead rate
b.plantwide overhead rate
c.departmental overhead rate
d.overhead variance
e.overapplied overhead
f.underapplied overhead
g.applied overhead
h.normal cost of goods sold
The amount by which applied overhead exceeds actual overhead

Question 30

Actual overhead costs are accumulated in the overhead control account.

Question 31

The journal entry for $17 of underapplied overhead is:

Question 32

Match each item with the correct statement below.
a.predetermined overhead rate
b.plantwide overhead rate
c.departmental overhead rate
d.overhead variance
e.overapplied overhead
f.underapplied overhead
g.applied overhead
h.normal cost of goods sold
An overhead rate computed using estimated data

Question 33

When materials are put into production, they are taken from the Raw Materials account and put into the Work in Process account.

Question 34

Match each item with the correct statement below.
a.predetermined overhead rate
b.plantwide overhead rate
c.departmental overhead rate
d.overhead variance
e.overapplied overhead
f.underapplied overhead
g.applied overhead
h.normal cost of goods sold
Overhead assigned to production using predetermined rates

Question 35

Match each item with the correct statement below.
a.actual cost system
b.job-order costing system
c.normal cost system
d.process-costing system
An approach that assigns actual costs of direct materials, direct labor, and overhead to products

Question 36

Match each item with the correct statement below.
a.predetermined overhead rate
b.plantwide overhead rate
c.departmental overhead rate
d.overhead variance
e.overapplied overhead
f.underapplied overhead
g.applied overhead
h.normal cost of goods sold
A single overhead rate calculated using all estimated overhead for a factory divided by the estimated activity level across the entire factory

Question 37

Match each item with the correct statement below.
a.actual cost system
b.job-order costing system
c.normal cost system
d.process-costing system
A costing system that accumulates production costs by process or by department for a given period of time

Question 38

Overhead costs are assigned to Finished Goods using a predetermined rate.

Question 39

Match each item with the correct statement below.
a.predetermined overhead rate
b.plantwide overhead rate
c.departmental overhead rate
d.overhead variance
e.overapplied overhead
f.underapplied overhead
g.applied overhead
h.normal cost of goods sold
The difference between actual overhead and applied overhead

Question 40

In job-order costing, the journal entry for $7,200 raw materials requisitioned for use in production is:

Question 41

Match each item with the correct statement below. Answers may be used more than once.
a.Job-order cost sheet
b.Time ticket
c.Materials requisition form
Every time a new job is started this is prepared.

Question 42

A(n) ___________________________ determines unit cost by adding actual direct materials, actual direct labor, and estimated overhead.

Question 43

Match the following cost flows with the proper event in a job-costing firm:
a.completion of job
b.end of each accounting period
c.materials are moved from storage into production
d.product is sold
e.end of year
A _______ is one distinct unit or set of units.

Question 44

Strict ______________________ are rarely used because they cannot provide accurate unit cost information on a timely basis.

Question 45

Match each item with the correct statement below. Answers may be used more than once.
a.Job-order cost sheet
b.Time ticket
c.Materials requisition form
This form is filled out by each employee every day.

Question 46

Match the following cost flows with the proper event in a job-costing firm:
a.completion of job
b.end of each accounting period
c.materials are moved from storage into production
d.product is sold
e.end of year
immaterial overhead variance closed to costs of goods sold

Question 47

_________________ is found by multiplying the predetermined overhead rate by the actual use of the associated activity for the period.

Question 48

The ___________________________ is calculated at the beginning of the year by dividing the total estimated annual overhead by the total estimated level of cost driver.

Question 49

Match the following cost flows with the proper event in a job-costing firm:
a.completion of job
b.end of each accounting period
c.materials are moved from storage into production
d.product is sold
e.end of year
cost of materials is removed from materials account and added to work-in- process account

Question 50

Match the following cost flows with the proper event in a job-costing firm:
a.completion of job
b.end of each accounting period
c.materials are moved from storage into production
d.product is sold
e.end of year
the costs of job are transferred from the work-in-process account to finished goods account

Question 51

Match each item with the correct statement below. Answers may be used more than once.
a.Job-order cost sheet
b.Time ticket
c.Materials requisition form
This form may be used to maintain proper control over a firm's inventory of direct materials.

Question 52

In a _______________________________ costs are accumulated by job.

Question 53

Match each item with the correct statement below.
a.predetermined overhead rate
b.plantwide overhead rate
c.departmental overhead rate
d.overhead variance
e.overapplied overhead
f.underapplied overhead
g.applied overhead
h.normal cost of goods sold
Estimated overhead for a single department divided by the estimated activity level for that same department

Question 54

Match each item with the correct statement below. Answers may be used more than once.
a.Job-order cost sheet
b.Time ticket
c.Materials requisition form
This form asks for the type, quantity, and unit price of direct materials.

Question 55

Match the following cost flows with the proper event in a job-costing firm:
a.completion of job
b.end of each accounting period
c.materials are moved from storage into production
d.product is sold
e.end of year
direct materials, direct labor and applied overhead are totaled to yield manufacturing cost of job

Question 56

Match the following cost flows with the proper event in a job-costing firm:
a.completion of job
b.end of each accounting period
c.materials are moved from storage into production
d.product is sold
e.end of year
schedule of costs of goods sold is prepared

Question 57

Match the following cost flows with the proper event in a job-costing firm:
a.completion of job
b.end of each accounting period
c.materials are moved from storage into production
d.product is sold
e.end of year
actual overhead is reconciled with applied overhead

Question 58

Match the following cost flows with the proper event in a job-costing firm:
a.completion of job
b.end of each accounting period
c.materials are moved from storage into production
d.product is sold
e.end of year
costs of product are removed from finished goods and added to cost of goods sold

Question 59

Match each item with the correct statement below. Answers may be used more than once.
a.Job-order cost sheet
b.Time ticket
c.Materials requisition form
The job order number, or name, head this form.

Question 60

__________________________ is a costing system that accumulates production costs by process or by department for a given period of time.

Question 61

A __________________________ is used by the cost accounting department to enter the cost of direct materials onto the correct job-order cost sheet.

Question 62

The cost of goods sold before an adjustment for an overhead variance is called ____________________.

Question 63

When units are sold, their total cost is debited to _______________ and credited to ____________.

Question 64

The difference between actual overhead and applied overhead is called a (n) _________________.

Question 65

Applied overhead costs are charged to ________________.

Question 66

When materials are requested for production the cost is removed from ____________ and added to ____________.

Question 67

The _____________________ is subsidiary to the work-in-process account and is the primary document for accumulating all costs related to a particular job.

Question 68

Production costs do not include

A) direct materials.
B) direct labor.
C) variable overhead.
D) fixed overhead.
E) All of these are production costs.

Question 69

Which method of measuring costs associated with production is more widely used in practice?

A) normal Costing
B) actual Costing
C) both are used equally.
D) neither one is used.
E) cannot be determined.

Question 70

________________________ are directly responsible for creating the products or services sold to customers.

Question 71

Which of the following is the assignment process used with normal costing?

A) Actual direct materials, actual direct labor and actual overhead cost are assigned to products.
B) Actual direct materials cost is assigned to products, but direct labor and overhead costs are assigned using predetermined rates.
C) Actual direct labor cost is assigned to products, but direct material and overhead costs are assigned using predetermined rates.
D) Actual direct material and direct labor costs are assigned to products, but overhead costs are assigned using predetermined rates.
E) All manufacturing costs are assigned using predetermined rates.

Question 72

How are unit costs calculated?

A) by dividing total cost associated with the units produced by the unit cost
B) by adding all variable costs per unit associated with the units produced
C) by dividing total fixed costs by the number of units produced
D) by dividing total cost associated with the units produced by the number of units produced
E) by adding unit variable costs to total fixed costs

Question 73

A _____________________ is a single overhead rate calculated by using all estimated overhead for a factory divided by the estimated activity level across the entire factory.

Question 74

_________________________ is the amount that appears as an expense on the income statement after the adjustment for the period's overhead variance is recorded.

Question 75

If actual overhead is greater than applied overhead, then the variance is called ___________________.

Question 76

Firms in the ____ business are most likely to use a process-costing system.

A) printing
B) dental
C) construction
D) petroleum
E) automobile repair

Question 77

Which of the following are easy to trace to individual jobs?

A) direct materials and overhead
B) direct materials and direct labor
C) direct labor and overhead
D) overhead and indirect labor
E) depreciation on machinery and indirect labor

Question 78

A source document by which direct labor costs are assigned to individual jobs is known as a _______________.

Question 79

The ____________________ of allocation recognizes all interactions among support departments.

Question 80

Which of the following is not a characteristic of job-order costing?

A) Wide variety of distinct products.
B) Unit cost is computed by dividing process costs of the period by the units produced in the period.
C) Unit cost is computed by dividing total job costs by units produced on that job.
D) Costs accumulated by job.
E) Typically, the cost of one job is different from that of another job.